Partisan Presidential Influence over US Federal Budgetary Outcomes: Evidence from a Stochastic Decomposition of Executive Budget Proposals

Abstract

Can American presidents use their budget proposal authority to achieve their own partisan policy priorities? This is an important, yet challenging, question to answer since formal executive authority is ambiguous, and budgetary powers are shared in the US separation of powers system. Indeed, the question remains open since prior empirical designs conflate external constraints (arising from political and policy conditions) with those that reflect executive partisan policy priorities. This study advances a novel stochastic decomposition of executive budget proposals in order to analyze the extent to which presidents can shape the legislative funding of US federal agencies consistent with their own partisan policy priorities. Statistical evidence reveals that presidents exert partisan-based budgetary influence over appropriations that cannot be ascertained from previous empirical studies that rely on either the observed gap between presidential requests and congressional appropriations or standard instrumental variable estimation methods. The statistical evidence also indicates that presidents are marginally more effective at converting their partisan policy priorities into budgetary outcomes under divided party government. Contrary to theoretical predictions generated from bilateral veto bargaining models, presidents are also shown to exert effective partisan budgetary influence even when their budget requests exceed congressional appropriations.